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TheCountOfNowhere

The greatest thread of all...The BTL running for the exit thread

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On 04/02/2017 at 1:43 PM, Digsby said:

http://www.rightmove.co.uk/property-for-sale/property-45301809.html

Ex rental: http://www.rightmove.co.uk/property-to-rent/property-38428392.html

Bought June 2014 for £196,000 

HPI in the area of 23% since makes that £240,672

Originally on for an optimistic £244,950, now reduced to £229,995

BTLexit

Property bee reviels this...........

22/02/2017,
  • Price changed: £229,995
04/02/2017,
  • Price changed: from '£244,950' to '£229,995
  • Price changed: Fixed Price £229,995  
16/01/2017,
  • Price changed: from '£249,950' to '£244,950
24/11/2016,
  • Price changed: from '£265,000' to '£249,950
07/11/2016,
  • Initial entry found. 

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Gave the keys back to the LL yesterday.    I actually get on with him pretty well, and we had a chat. He also has a second rental property that has come to end of mortgage term, this he is also selling.  

Rang the council to notify them for Council Tax purposes.  Spoke with someone, who then offered the information this has also happened to  two people in his street.

So that's at least ten I know of, without ever once looking for the information.  

When you start to think about it, BTL mortgages were generally taken by people with money to invest, quite possibly the older demographic.  As their i.o's come to an end, they aren't going to be renewed, natural wastage if you like.   They are too old to get another mortgage of any sort now, and probably don't want the hassle anyway.   

Happy Days.

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34 minutes ago, thomasthetanker said:

So where is all the money from BTL going to go to then?  Whats the next bubble?  

Some of the papers are touting Commercial property, but I think that's a crazy idea given the state of the high street.

Any ideas?

I have a question for the banking geeks on this. 

If BTLers with IO loans become net sellers with cash buyers and OOs with capital repayment loans flowing the other way ...

Doesn't this reduce the money supply in the economy? 

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1 hour ago, Patient London FTB said:

I have a question for the banking geeks on this. 

If BTLers with IO loans become net sellers with cash buyers and OOs with capital repayment loans flowing the other way ...

Doesn't this reduce the money supply in the economy? 

Hmm..

1. Selling a BTL and paying off the debt reduces the money supply.

2. Borrowing a repayment mortgage to buy increases the money supply, but then erodes it faster than an IO mortgage in the longer term due to repayments.

3. Bankruptcy leaves the money supply unchanged, but tends to support the money supply longer term as the loan is never paid down and the money remains in circulation.

So broadly speaking, it would be fairly neutral I guess. However the bigger the crash, the more new borrowing as prices become affordable, and the more bankruptcies ... both increasing the money supply. 

I reckon..

Edited by ManVsRecession

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23 minutes ago, Patient London FTB said:

If BTLers with IO loans become net sellers with cash buyers and OOs with capital repayment loans flowing the other way ...

Doesn't this reduce the money supply in the economy? 

That's a interesting point. I would say that:

  • The IO loan is wiped out by the purchaser, which is deflationary;
  • The cash buyer does not replace the IO loan as the money already exists, giving a relatively big deflation effect;
  • The OO using capital repayment does replace the IO loan but slowly pays it down which is deflationary over the mortgage term.
Edited by doahh

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22 minutes ago, ManVsRecession said:

Hmm..

1. Selling a BTL and paying off the debt reduces the money supply.

2. Borrowing a repayment mortgage to buy increases the money supply, but then erodes it faster than an IO mortgage in the longer term due to repayments.

3. Bankruptcy leaves the money supply unchanged, but tends to support the money supply longer term as the loan is never paid down and the money remains in circulation.

So broadly speaking, it would be fairly neutral I guess. However the bigger the crash, the more new borrowing prices as become affordable, and the more bankruptcies ... both increasing the money supply. 

I reckon..

 

15 minutes ago, doahh said:

That's a interesting point. I would say that:

  • The IO loan is wiped out by the purchaser, which is deflationary;
  • The cash buyer does not replace the IO loan as the money already exists, giving a relatively big deflation effect;
  • The OO using capital repayment does replace the IO loan but slowly pays it down which is deflationary over the mortgage term.

I came across this stat in Savills' latest research, published today: 

"Outstanding levels of mortgage debt have risen by just 10% (£120 billion) over the past five years. By contrast, the level of privately held housing equity has risen by a chunky 49% in the same period."

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2 hours ago, dispossessed said:

Another from Norwich, seems to be a lot of what look like ex-rental terraces on the market now.

Yep I confirm I am seeing this also + lots of chains falling though.

BTL taking out bottom end

London top end falling so less money to buy houses in Norwich for 600k - 1 million +

Deluded sellers in the middle

Edited by Fromage Frais

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22 minutes ago, Patient London FTB said:

 

I came across this stat in Savills' latest research, published today: 

"Outstanding levels of mortgage debt have risen by just 10% (£120 billion) over the past five years. By contrast, the level of privately held housing equity has risen by a chunky 49% in the same period."

Isn't that another just another way of saying the prices have gone up and transactions have gone down?

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22 minutes ago, Patient London FTB said:

 

"Outstanding levels of mortgage debt have risen by just 10% (£120 billion) over the past five years. By contrast, the level of privately held housing equity has risen by a chunky 49% in the same period."

I presume that is because house prices are set at the margin i.e a small number of transactions of the total housing stock sets the current price of the total housing stock.

It could quickly go into reverse and let's hope it does!

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27 minutes ago, drunkincharge said:

Isn't that another just another way of saying the prices have gone up and transactions have gone down?

I posted it in the spirit of showing that the amount of new money created by housing transactions over the past five years is lower than you'd think. 

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50 minutes ago, Fromage Frais said:

Yep I confirm I am seeing this also + lots of chains falling though.

BTL taking out bottom end

London top end falling so less money to buy houses in Norwich for 600k - 1 million +

Deluded sellers in the middle

Another angle on this.    I have been thinking just as you have.  One extra train of thought is that although we expect the prices to deflate across the board, could we also see a phenomenon where aged "kids left home" couples move out, and buy into smaller housing in ripple areas?  If they can sell their 3-4 -5 beds in inner commuter belt, then they can snap up a smaller outlying house in outer commuter belt/sticks at pretty much full asking with little worry of SD. 

If that starts to happen, then this pours more pain on low end property becoming more affordable to many.   It also sets up a situation where it is high end commuter belt that could really take it up the ***.  

It's just too difficult to get a handle on.  Interesting times.

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18 minutes ago, Shea VanHaven said:

Another angle on this.    I have been thinking just as you have.  One extra train of thought is that although we expect the prices to deflate across the board, could we also see a phenomenon where aged "kids left home" couples move out, and buy into smaller housing in ripple areas?  If they can sell their 3-4 -5 beds in inner commuter belt, then they can snap up a smaller outlying house in outer commuter belt/sticks at pretty much full asking with little worry of SD. 

If that starts to happen, then this pours more pain on low end property becoming more affordable to many.   It also sets up a situation where it is high end commuter belt that could really take it up the ***.  

It's just too difficult to get a handle on.  Interesting times.

The problem with that scenario was outlined to me when I got a call back on a 400k (offered 350) family home after the chain fell though.  

Offer was not accepted and its still for sale same price as before.

Once the bottom falls its almost worse than rationing mortgages as the only way for people to buy houses at 400k plus is the money from the old one + the mortgage.  That chain collapsed because the loon who offered full price was selling his house in the city for 300k... and then did not.

Sell terrace for 280/300 and buy new house with new 100k mortgage.

If Buy to let accounted for 1 in 5 new mortgages / sales they it would have been over represented in the lower end of the market.

BTL buyers where the "marginal buyers" as they had a affordability advantage over owner occupiers.

The scenario you have outlined above has been happening constantly all through this bubble towns like Wroxham justify 350k 2 bed riverside bungalows on this scenario.

As others have said you need 2 workers selling a house + large mortgage + mum and ad helping to bridge the gaps in the ladder.

Its all got too expensive and the tax changes have amplified this.

= falls until property gets cheaper or people get paid loads more or more easy cheap credit

Edited by Fromage Frais

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On 01/02/2017 at 4:45 PM, TheCountOfNowhere said:

 

The genius ( if I can call it that ) of Cameron/Osborne was their propping up the market from the bottom via HTB, using QE to fund it and despeate idiot BTLers to buy into it.

 

 

yes, but how else can we show the world that our mortgage based economy is growing? 
It's also the reason they keep fuelling the bubble. The bubble popping is synonymous with our economy going to shit.

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2 minutes ago, thisisthisitmaybe said:

Or a combination of all three? Nah, let's just have a big f-ing hpc!

Because the prices are not linked with real wages the markets natural state is to crash... it wants to but the BOE and government know this and will take action in the next 6 months again unless post brexit there is a change of tactics. 

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Just now, Fromage Frais said:

Because the prices are not linked with real wages the markets natural state is to crash... it wants to but the BOE and government know this and will take action in the next 6 months again unless post brexit there is a change of tactics. 

Agreed. There is a split on this forum as to what May and Hammond will do. I look at their records, and neither of them are risk-takers, hence I think the government will end up reversing stamp duty and re-instating HTB as they see prices fall.

But I could be wrong. I hope I'm wrong. Even if they reverse stamp duty and reinstate HTB, there is no assurance this would prevent a crash.

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5 minutes ago, Fromage Frais said:

Because the prices are not linked with real wages the markets natural state is to crash... it wants to but the BOE and government know this and will take action in the next 6 months again unless post brexit there is a change of tactics. 

Post Brexit.   Currently there is exceptionally high scepticism regarding the stability and coherence of the EU etc.  Today's Business Telegraph has some pretty powerful articles re europe, european currencies, debt mountains, liquidity etc, and I really don't think anyone is making this stuff up- anymore.   We could have some real horror shows in Europe over the next three to six months.  Quite frankly, everything EU/Brexit etc is so unpredictable, it's going to be a case of who blinks first, and could either have utterly dire, or exceptionally wonderful consequences for the U.K, so why would Gov.UK rush to state a position?

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1 hour ago, Shea VanHaven said:

Another angle on this.    I have been thinking just as you have.  One extra train of thought is that although we expect the prices to deflate across the board, could we also see a phenomenon where aged "kids left home" couples move out, and buy into smaller housing in ripple areas?  If they can sell their 3-4 -5 beds in inner commuter belt, then they can snap up a smaller outlying house in outer commuter belt/sticks at pretty much full asking with little worry of SD. 

If that starts to happen, then this pours more pain on low end property becoming more affordable to many.   It also sets up a situation where it is high end commuter belt that could really take it up the ***.  

It's just too difficult to get a handle on.  Interesting times.

It will all smooth out.

Of course we would get the occasional seller of 3-5 bed house sell at near peak (80-90% of what they wanted), and then buy some smaller place at top whack on the downsize.

The high price paid will get smoothed out against other transactions, and more importantly, if that's beginning of higher end falling, it will soon work its way through, and down into the market.

Edited by Venger

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23 hours ago, SavingBear said:

Property bee reviels this...........

22/02/2017,
  • Price changed: £229,995
04/02/2017,
  • Price changed: from '£244,950' to '£229,995
  • Price changed: Fixed Price £229,995  
16/01/2017,
  • Price changed: from '£249,950' to '£244,950
24/11/2016,
  • Price changed: from '£265,000' to '£249,950
07/11/2016,
  • Initial entry found. 

Thanks, Property Tracker didn't pick up the earlier outrageous initial price. Definitely some disappointment there. I wonder what it will sell for. 

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7 hours ago, Venger said:

It will all smooth out.

Of course we would get the occasional seller of 3-5 bed house sell at near peak (80-90% of what they wanted), and then buy some smaller place at top whack on the downsize.

The high price paid will get smoothed out against other transactions, and more importantly, if that's beginning of higher end falling, it will soon work its way through, and down into the market.

Also average prices deceive. A rising tide lifts all boats,  but on the way down the houses that sell are generally the better kept/updated, rubbish that would have sold in the upcycle quite often goes no bid.

 

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1 minute ago, onlyme2 said:

the houses that sell are generally the better kept/updated, 

 

It's always struck me that BTLs are particularly stupid...they're buying houses for someone else to live in, massive wear and tear, no upkeep, then they think 30 years later it'll be worth a fortune.

When the correction comes, all the badly maintained BTLs will be worthless.

 

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  • 239 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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